The Quick Read: Usually no. On an asset-based mortgage, the lender’s review rests on verified balances, not on the income a borrower reports to the IRS, so traditional personal-income documentation is generally not part of the file, though the assets themselves are documented in detail, subject to underwriting.
- On the asset qualifier path, eligible assets must equal or exceed the entire loan amount, and no employment or income is documented.
- On the asset depletion path, usable assets divided by 60 months become qualifying income that runs through the debt-to-income test.
- Statements replace returns: two months per account on the qualifier path, and statements at least 120 days old plus one within 45 days on the depletion path.
- Leverage runs up to 80% on a purchase on the qualifier path, with figures varying by path and occupancy.
- Washington borrowers see the same program figures as everyone else. State facts change the context, not the parameters.
Lendmire is a broker. It places these files with select lenders in its network, and consumer mortgage lending is licensed in 16 states, Washington among them.
What “Asset-Based” Means (Two Paths, One at a Time)
Asset-based mortgage is a label, not a single formula. Across the wholesale network, it covers two different qualification paths, and a borrower is qualified on one at a time.
The asset qualifier path looks at one question: do your eligible assets cover the whole loan? If they do, the file is reviewed on assets alone. No employment is documented. No income is documented.
The asset depletion path turns assets into income. Usable assets are divided by 60 months, and that monthly figure carries the housing payment and other debts through a debt-to-income test.
Never blend the two. Each has its own credit percentages, its own leverage limits, and its own seasoning rules. When a Washington borrower asks what counts, the first answer is always: on which path?
This is a different product from a DSCR loan. DSCR is business-purpose financing for rentals, and it qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. An asset-based mortgage is a consumer loan on a home the borrower will live in or use as a second home, with investment property allowed only on the depletion path. The complete DSCR loans guide covers the rental side in depth.
Does It Require Tax Returns?
No, not as a general rule. Neither path builds the coverage figure from a Form 1040. The qualifier path documents no income at all. The depletion path derives income from balances, so the underwriter has no reason to ask what your return says.
Here is the part people miss. “No tax returns” does not mean “no documentation.” The assets are documented on both paths. The file still carries:
- Credit, with a 600 minimum on the qualifier path and the lender’s matrix on the depletion path
- Account statements for every qualifying asset
- ID and proof of account ownership
- The appraisal and title work on the property
- Source review on any large or recent deposit
Think of it as swapping one stack of paper for another. Returns come out. Statements, seasoning, and sourcing go in.
There are exceptions worth knowing. If a borrower wants to supplement asset income with documented employment or other income, that extra income is documented like any other. On the depletion path, asset-derived income may supplement documented income up to a 45% debt-to-income ratio. And individual lenders in the network sometimes ask for an extra item on an unusual file. Subject to underwriting, the answer is “usually not,” not “never.”
Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction.
Why Returns Can Be Skipped but Verification Still Happens
The lender still has to decide you can repay. That is true of any consumer mortgage. The difference is what evidence it reviews.
On the qualifier path, the ability-to-repay review rests on the assets. If eligible assets equal or exceed the entire loan, the file has its answer: the balance itself is the repayment source. That is why no employment or income is documented.
On the depletion path, the review rests on derived income. Balances are converted, tested against the housing payment and debts, and the debt-to-income result decides the file.
Neither path is a loophole. The loan is a consumer mortgage, so the standard consumer disclosures apply. Lenders in the network underwrite every file individually, and approval is never assured.
What You Submit Instead
A Washington file on either path usually looks like this:
| Document | Purpose | Path |
|---|---|---|
| Account statements | Prove balances and ownership | Both |
| Two months per account | Show 60 days of seasoning | Qualifier |
| Statements 120+ days old, plus one within 45 days | Show history | Depletion |
| Government ID | Identity | Both |
| Credit authorization | Credit review | Both |
| Source of large deposits | Confirm funds are the borrower’s | Both |
| Sale, inheritance, or settlement papers | Excused from seasoning on depletion | Depletion |
Large or recent deposits are the friction point on most files. A transfer between your own accounts is easy to explain with matching statements. An unexplained deposit that shows up in the last 60 days is not. Pull the paper trail before the file goes in, not after the underwriter asks.
Sale-of-business, inheritance, and legal-settlement funds are excused from the depletion seasoning rule. They are still documented. Keep the closing statement, the estate paperwork, or the settlement agreement ready.
How Assets Become Qualifying Income
The formula is plain. Take eligible assets after haircuts, divide by 60 months, and you have monthly qualifying income. The assets are not sold or drained. It is a calculation.
The share of each balance that counts on the depletion path:
| Asset | Share counted |
|---|---|
| Cash accounts | 100% |
| Certificates of deposit | 100% |
| Securities | 80% |
| Private stock | 75% |
| Retirement accounts | 70% at any age |
| Real-estate equity | 60% |
Run the numbers on a borrower holding $1,500,000 in securities and $300,000 in cash. Securities count at 80%, which is $1,200,000. Cash counts at 100%, which is $300,000. That is $1,500,000 usable. Divided by 60 months, it is $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts through the debt-to-income test. This is illustrative, and the lender’s own calculation governs.
Not eligible on the depletion path: custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, non-vested restricted stock units, and funds from non-regulated financial companies. Cryptocurrency, precious metals, and collectibles are not published as eligible on either path. The documented route is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender.
Depletion has floors. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. When depletion is the only income source, liquid assets can never fall below $250,000. If asset income only supplements documented income, the minimum-assets rule is waived.
How Assets Cover the Loan
The qualifier path is simpler. No income conversion. You just add up usable balances and compare them to the loan.
| Asset | Share counted |
|---|---|
| Brokerage accounts | 100% |
| Certificates of deposit | 100% |
| Money market | 100% |
| Savings | 100% |
| 401(k) and IRA, under 59½ | 90% |
| 401(k) and IRA, 59½ or older | 100% |
Accounts combine. Take an $800,000 loan against $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) held under age 59½ (90% counts, so $270,000), and $200,000 in savings (100% counts, so $200,000). Usable assets total $800,000. The file is reviewed on assets alone, subject to underwriting.
Notice what the retirement haircut does. A borrower under 59½ with most of their wealth in a 401(k) needs more total balance than the loan amount. A borrower at 59½ or older counts the full balance.
Reserves are not required at or below 75% loan-to-value on this path. Above that, the lender sets them.
Leverage, Credit, and Loan Size
These figures are ceilings and floors, not offers. Subject to underwriting and through select programs in the network:
| Path and occupancy | Purchase | Refinance |
|---|---|---|
| Qualifier, primary or second home | Up to 80% | Up to 75% |
| Depletion, primary or second home | Up to 80% | 80% rate-and-term, 60% cash-out |
| Depletion, investment property | Up to 65% | 65% rate-and-term, 60% cash-out |
Cash-out proceeds never count as qualifying assets on the depletion path. Whether cash-out is allowed on the qualifier path is set by the lender and is not published.
Loan amounts run up to $4,000,000 on the qualifier path and from $125,000 to $3,500,000 on the depletion path.
On credit, the qualifier path has a 600 minimum. The depletion path follows the lender’s matrix. A first-time investor on the depletion path needs 700. Housing history is 0x30x12, though one 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible, and a housing event needs 4 years of seasoning on the depletion path.
Washington-Specific Considerations
The program figures do not change by state. A Washington borrower sees the same percentages, the same seasoning, and the same loan limits as a borrower in any of the other 15 licensed states. What changes is the surrounding context.
Washington is a community-property state, so married borrowers should expect the lender to ask how accounts are titled and whether a spouse’s name appears on the statements. Trust-held assets and entity-held assets need their own paperwork showing the borrower’s ownership share. Business accounts count only up to that share, and they are not published as eligible beyond it.
Washington home prices are high enough in many metros that loan size, not credit, is the limiting factor. A borrower buying near the top of the range should check which path’s loan cap fits. The qualifier path reaches $4,000,000. The depletion path stops at $3,500,000.
The Business-Purpose Line (and Why Occupancy Matters)
This is where the tax-return question gets a legal edge. Federal Truth in Lending rules treat credit for a business or commercial purpose differently from consumer credit. Per the CFPB’s Regulation Z § 1026.3, credit to acquire or maintain non-owner-occupied rental property is treated as business purpose. That is why a pure rental loan runs on DSCR and not on a consumer income test.
The same page sets a 14-day occupancy test. If the owner expects to occupy the property for more than 14 days in the coming year, it cannot be treated as non-owner-occupied, and the business-purpose treatment does not apply. Occupy it, and you are in consumer territory.
Business-purpose status is not a free pass either. A Hunton legal commentary on business-purpose investment mortgages warns that state licensing and other rules can still apply.
Asset-based mortgages sit on the consumer side of that line. They are for homes the borrower will live in, second homes, or (on the depletion path only) investment property.
Which Path Fits Which Borrower
Match the path to the balance sheet.
- Assets cover the loan outright. A retiree who sold a business and holds cash, CDs, and brokerage accounts worth more than the purchase price belongs on the qualifier path.
- Assets are large, but the loan is larger than the assets. A household living on a portfolio with a loan above its usable balances belongs on the depletion path, where assets become income.
- Deposits show the income, not balances. A self-employed borrower with strong monthly deposits belongs on a bank statement program, a different product that documents income with deposits.
- The property is a pure rental. That is DSCR territory. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Select lenders in the network offer programs below 1.00 coverage, though leverage and terms adjust. Lendmire’s piece How Many Years of Tax Returns Does a Self-Employed Mortgage Need? covers the full-doc contrast.
One more distinction: an asset-based mortgage is different from a conventional loan, which typically relies on traditional personal-income documentation and pay stubs. Conventional underwriting is built around documented income. This program is built around documented balances.
Where Files Go Wrong
Three failure modes show up repeatedly.
Unseasoned funds. Money moved into an account last month does not count the way money held for 60 days does on the qualifier path. Depletion files need statements at least 120 days old.
Retirement math done on the wrong path. A borrower counts a 401(k) at 90% on the qualifier path, then discovers the depletion path counts it at 70%. The percentages are not interchangeable.
Assuming “no tax returns” means “no questions.” Large deposits, joint accounts, and trust ownership all get reviewed. A clean statement trail saves more time at the underwriter’s desk than anything else a borrower can do.
Key Terms Defined
Asset qualifier path: A qualification method where eligible assets must equal or exceed the entire loan amount, with no income documented.
Asset depletion path: A method that divides usable assets by 60 months to create monthly qualifying income.
Haircut: The share of an asset’s balance that is not counted, such as retirement accounts counting at 70% on the depletion path.
Seasoning: The length of time funds must sit in an account before they count, such as 60 days on the qualifier path.
Debt-to-income (DTI): The comparison of monthly debts, including the housing payment, to monthly qualifying income.
Frequently Asked Questions
Do I need W-2s or pay stubs for an asset-based mortgage?
Generally no. The qualifier path documents no employment or income. The depletion path derives income from assets, so pay stubs are not the basis. If you want to supplement asset income with documented earnings, that extra income is documented, subject to underwriting.
Do I have to sell my investments to qualify?
No. On the depletion path the assets stay invested, and the 60-month division is only a calculation. On the qualifier path the assets simply have to be there, seasoned and documented. Selling is not required by either path.
Can I use a 401(k) or IRA?
Yes, at a discount. On the qualifier path, retirement balances count at 90% under age 59½ and 100% at 59½ or older. On the depletion path they count at 70% at any age. Both depend on lender review.
Does this work for a rental property?
Only on the depletion path, with leverage of up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out. For a pure rental, many investors find DSCR a better fit, since it qualifies primarily on property-level rental income covering the payment.
Is this the same as a no-doc loan?
No. The assets are documented on both paths, with statements, seasoning, and source review. What drops out is income documentation, not documentation altogether.
Next Step
If you are qualifying on assets rather than income and want to see how the numbers work, Lendmire can help you compare asset-based mortgage options based on your statements, the property, credit profile, leverage, and your goals. Reach the team at 828-256-2183 or request a quote.
Lendmire’s asset-based mortgage in Washington page presents the program for Washington borrowers.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB, Regulation Z § 1026.3
2. Hunton, Beware of Business Purpose
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Savings Account vs Brokerage Account: Which Counts More on an Asset-Based Mortgage? · What Counts as an Asset Statement for a Mortgage? · Asset Qualifier Mortgage vs Bank Statement Mortgage
Guides: Asset-Based Mortgage in Washington
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.